Russia's largest transnationals double their foreign assets

Russia’s 25 largest transnational companies have doubled their assets abroad over the past two years. The foreign assets of Russian companies are worth $US60 billion with energy and metal firms among the most acquisitive.

The past two years have been busy for Russian companies buying assets overseas.

The most successful shoppers have been energy firms Gazprom and Lukoil, investing $US 18 billion and $US 10 billion respectively.

Russian companies prefer to buy in Western Europe – 52% of assets are located there. The Commonwealth of Independent States ranks second in popularity.

Aleksandr Mansilya-Kruz from Skolkovo Business School states that “to lesser extent they are present in Asia, Africa and the Americas. This pact is expanding quite rapidly meaning the recent acquisitions in the interests Russian companies in North America growing quite rapidly.”

By global standards, Russia lacks macroeconomic stability. We are improving but Russia still lacks stability in GDP growth, inflation and the rouble exchange rate. In this situation, mid-term investments over three or four years remain the most profitable

Aleksey Kudrin,
Russian Finance Minister

Vitaly Farafonov, Corporate Finance Advisor at from Deloitte in Moscow says not only large companies buy assets abroad. Russia’s mid-size firms are looking for foreign know-how.

“They go to acquire companies in Europe to get technological know-how, more efficient ways of work because with the growth in Russian companies over the last few years they have not had an opportunity to look back at their operations. And now the European partner will help them to streamline their operations,” stresses he.

Analysts forecast that Russia will pump $US 20 billion abroad in each of the next four years.

But investment abroad is dwarfed by the money that flows into Russia.

The Finance Ministry says despite the liquidity crisis, direct foreign investment in the country may reach $US 45 billion.

Aleksey Kudrin concedes that foreign investors are not necessarily in Russia for the long-term.

“By global standards, Russia lacks macroeconomic stability. We are improving but Russia still lacks stability in GDP growth, inflation and the rouble exchange rate. In this situation, mid-term investments over three or four years remain the most profitable,” Russian minister said.

Market watchers forecast direct foreign investment will grow by not less than 30% next year, especially with investors getting answers to the key political questions.